Leasing Retail Space - Evaluating Retail Space

By Author: Patrick Oconnor
Total Articles: 42
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Due Diligence

The previous sections of leasing retail space addressed selecting the general location, selecting the type of retail space and the sighting how to find your retail space. The next several parts will address issues to consider when evaluating a specific retail space option.
Access

Issues for each option include traffic counts, traffic patterns, and ingress and egress. As you evaluate location specific issues, contrast the features of the space being evaluated with the most successful competitor or locations. In other words, how does the traffic count for a specific site compare to the traffic count for the successful locations for your competitors?
Traffic Count

Traffic count is simply the amount of traffic on a roadway. In many cases, you can get information on traffic count from the city, county or highway department. The retail space owner will also have traffic counts in some cases. It the traffic count was done by the landlord, ask for details on how and when it was done. For example, if you expect most of your traffic on a weekend, and the traffic count was performed on a weekday, ...
... the traffic count may not be meaningful.
Traffic Pattern

Traffic patterns consider when a prospective customer is most likely to stop at your establishment. If you're planning a coffee shop, you would want to be on the "going to work side" of the street. If you're planning a store with fast food or prepared food for dinner time, you would probably want to be on the "going home side" of the street.
Ingress and Egress

Ingress and egress are simply how simple or difficult it is to enter and leave the shopping center. If the shopping center is on a corner, can you leave on either street? Is it possible to access the shopping center from the far side of the road on either or both streets? Are their traffic backups during portions of the day which make ingress and egress difficult?
Visibility

Visibility of the retail center and your space can be critical or secondary factors. IF the business you're planning provides a product or service related to an impulse purchase at a modest price point, visibility of both the shopping center and your retail space are critical. However, visibility is much less important for retail space for a destination retail business. When you become seriously interested a space, drive each street in both directions several times to gain objective insights into the visibility of the center and your space.
Layout and Location

Next consider the layout of the space and its location within the center. If the layout is rectangular, are the width and depth reasonable for your business. If you are considering the L-shaped retail space in the corner of a retail shopping center, is the layout workable? However, even more important, is the L-shaped space consistent with the nature of your business? The L-shaped space in a shopping center is often much less expensive in the balance of the space. In many cases, it also has second-floor space. The space in the elbow of a shopping center can be a good choice for destination retail but is a horrible idea for most retail related to impulse purchases. For retail related to impulse purchases, seek out the most prime locations. These include end-caps and freestanding retail.
Signage

Consider the signage restrictions for the retail space. You may need to consider restrictions imposed by the landlord, local government and subdivision deed restrictions. Obtain a written copy of all signage restrictions soon after becoming seriously interested in a retail space. Obtain candid insights from your tenet rep broker regarding signage for the center. You may also want to visit with other tenants in the center regarding their experience with the signage approval process.
Get Signage Approval Early in Process!

Negotiating a lease can be an expensive process. Legal bills can quickly exceed $10,000 for complex retail leases. Make sure you are comfortable regarding obtaining approval for relevant signage prior to incurring substantial legal fees. For some franchises, signage requirements are inflexible.
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